Power sector bond: FG borrows ₦501bn to offset GenCos’ outstanding debt
The Federal Government has approved the issuance of a ₦501 billion power sector bond to settle part of the long-standing debt owed to electricity generation companies (GenCos), in a move aimed at stabilising Nigeria’s fragile power sector.
The bond, raised through the Debt Management Office (DMO), is designed to address accumulated payment shortfalls arising from electricity supplied to the national grid but not fully paid for due to liquidity challenges in the sector. Industry sources say the debt has severely constrained GenCos’ operations, limiting their ability to maintain plants, procure gas, and expand generation capacity.
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Officials explained that the intervention will help restore confidence across the electricity value chain, particularly among power producers and gas suppliers, whose services are critical to improving electricity supply nationwide.
GenCos have repeatedly warned that unpaid invoices and weak remittances from distribution companies (DisCos) threaten the sustainability of power generation, with several plants operating far below capacity as a result of funding gaps.
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The government’s decision to issue the bond follows sustained pressure from stakeholders and reflects renewed efforts to prevent a collapse of the sector. Analysts say clearing the debt could improve power availability, reduce plant downtime, and encourage fresh investment in generation infrastructure.
However, experts caution that while the bond provides temporary relief, structural reforms remain essential. They argue that without improvements in revenue collection, cost-reflective tariffs, and stronger regulatory enforcement, the sector could accumulate new debts.
The Federal Government has maintained that the intervention forms part of broader power sector reforms aimed at enhancing efficiency, financial viability, and reliable electricity supply for homes, businesses, and industries across the country.
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